"Preventing oversupply of HBD
To prevent a risky increase in HBD supply to the point where it could create a price death spiral, the proposed conversion operation would be programmed to fail whenever a user attempts to create an amount of HBD that would violate the global haircut limit. This means that users won’t be able to use this conversion operation whenever the haircut rule is in effect.

The problem with this is the boom bust scenario; in boom years it wont take a lot of Hive to convert into HBD. But we will be printing a huge amount of them (as the haircut wont be near its limit). Then all of a sudden the bear kicks in; you then have collapsing price of HIVE. The haircut is about to kick in but it comes too late; and now all those HBD that were printed at 1/10th of a hive at 10$ hive, are now being converted at 5 hive to 1 HBD (lets assume we drop back to 20 cents). This essentially creates a hive hyper inflation zone when all that HBD comes converting back to Hive (in the 10$ to 20 cent example below your minting 50 times the hive it took to create the HBD when you convert it back). So essentially you reduce inflation in boom years and multiply it out in bear years; meaning the Hive price whiplashes around. We saw this with steem.

The real question is why do we need a HBD? Why cant we just use cross chain (existing asset backed) stable coins via Hive Smart Chain or some other 2nd layer solution? To me HBD adds no value and poses an existential risk to Hive. And for what benefit ?